The U.S. macro environment on November 28, 2025, is characterized by accelerating growth and reaccelerating inflation, tight financial conditions, a flat yield curve, and compressed credit spreads.
– **Macro Regime**: Growth is accelerating alongside inflation, suggesting a robust but potentially overheating economic environment.
– **Financial Conditions**: Conditions remain tight, with a slight easing since last week, signaling a restrictive environment for borrowing and investment.
– **Yield Curve**: The curve is flat, indicating cautious long-term economic expectations despite strong current growth.
– **Credit Regime**: Credit spreads are compressed, historically low, suggesting high risk appetite and confidence in corporate credit.
– **Key Change**: The most notable change from the past week is the tightening in credit spreads, indicating increased market confidence.
## 1. Growth × Inflation: Growth Accelerating × Inflation Reaccelerating
The current macro regime of “Growth Accelerating × Inflation Reaccelerating” points to a dual increase in economic momentum and price levels. The industrial production index shows a year-over-year increase of 1.18%, with a significant 3-month acceleration of 0.84 percentage points. Inflation, measured by the core CPI, stands at 3.11% year-over-year, with a 3-month acceleration of 0.35 percentage points. This regime is consistent with last week, placing the economy in a phase of robust expansion, typically seen as a signal of economic overheating.
## 2. Financial Conditions: Tight
The financial conditions are classified as tight, with a financial conditions score of 0.87, slightly less tight compared to last week’s score of 0.89. The Federal Funds Rate is currently at 4.09%, and the 2-year Treasury yield is at 3.47%. This positioning indicates that monetary policy is restrictive, serving as a brake on the accelerating growth and inflation environment.
## 3. Yield Curve: Flat
The yield curve remains flat, with a spread of 0.20 percentage points between the 10-year and 3-month Treasury yields. This spread has narrowed slightly from last week’s 0.24 percentage points, suggesting a persistently cautious outlook on future economic growth despite the current acceleration. The flat curve may reflect concerns about long-term growth sustainability in the context of rising short-term rates.
## 4. Credit: Compressed
Credit conditions are described as “spread compression,” with the high-yield OAS at a low level of 2.95%, accompanied by a z-score of -1.00 and a percentile ranking of 6.54%. This indicates that credit spreads are historically low, reflecting strong investor confidence and a high appetite for risk. Compared to the past week, credit spreads have further compressed from 3.19%, indicating an increased willingness to invest in riskier assets, aligning with the current macro and financial conditions.
## 5. Conditional IF Scenarios (What tends to happen when this state persists)
– If the growth acceleration and inflation reacceleration persist, historically, this has often been followed by central banks maintaining or increasing interest rates to curb potential overheating.
– When financial conditions remain tight, it has frequently led to a moderation in economic growth as borrowing costs rise.
– If credit spreads stay in the bottom 10% of the past decade, subsequent adjustments to higher spreads were not uncommon, suggesting potential volatility ahead.
## 6. Uncertainty and How to Verify Going Forward
This analysis is based solely on today’s data snapshot and expresses conditional tendencies, not forecasts. Key metrics to monitor going forward include the GI regime (“Growth Accelerating × Inflation Reaccelerating”), financial conditions score (0.87), yield curve spread (0.20 pp), and high-yield spread (2.95%). Observing these over the next few months will help evaluate the accuracy of these tendencies.
Readers must make their own investment decisions; this article does not constitute financial advice.
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